YANGON, Aug 28 (Reuters) - Myanmar's government has agreed a deal with a Japanese consortium to develop jointly a special economic zone on the edge of the commercial capital, Yangon, as part of moves to expand industry and bring in much-needed investment.

Mitsubishi Corp, Marubeni Corp and Sumitomo Corp will team up for a 49 percent share in the 2,400-hectare (5,900-acre) estate in Thilawa, close to a deep-sea port, with the government set to invite private domestic firms to get involved, an industry official said.

"From the Myanmar side, we will set up a public consortium so that the general public can invest there," Win Aung, chairman of the Union of Myanmar Federation of Chambers of Commerce and Industry, said in an interview.

Win Aung said the Japanese government would provide financial assistance to support the development of infrastructure for the industrial zone, which will include factories and a gas-fired power plant.

"It will relieve the developers of the burden of huge costs," he said.

A revised law governing economic zones is in the works, but Japanese firms have shown themselves eager to get in early and expand their footprint in an underdeveloped country strategically located for their business.

DEBT WAIVED, LOANS RESUMED

Japan is a big investor in neighbouring Thailand, with car manufacturing plants and factories for high-tech industries, and plans are in place to connect Myanmar to Thai industrial zones and ports.

Japan sent a clear signal in April of its intention to move quickly into fast-changing Myanmar to capitalise on an improving investment climate and urgent infrastructure needs, just as European Union sanctions were suspended in response to reforms by its civilian-led government.

Japan waived 303.5 billion yen ($3.72 billion) of Myanmar's debt and agreed to restart development loans during a visit by President Thein Sein to Tokyo.

Since then, Daiwa Securities Group has agreed to help Myanmar develop a stock exchange and it plans to invest $380 million to build an information technology backbone for the government in partnership with major Japanese tech companies.

Sumitomo Mitsui Banking Corp has agreed to provide management help to Myanmar's Kanbawza Bank, the country's biggest private bank, with a view to a business deals.

Japan is expected to invest in some of Myanmar's other planned economic zones, such as Kyaukphyu on the Bay of Bengal and Dawei, a $50 billion project on the southern peninsula with access to the Indian Ocean and mainland Southeast Asia.

Dawei has struggled to gain traction and the Thai construction firm leading the project, Italian-Thai Development Pcl, has lobbied Japanese companies to invest there.